A limited liability partnership agreement (LLP) is a legally enforceable agreement established among the LLP’s members (and occasionally also including the LLP as a signatory to the contract). It specifies the rights, obligations, responsibilities, and liabilities of each member as well as the management and operation of the partnership. The overarching goal is to safeguard the respective investments and interests of individual LLP members while establishing a fair relationship between them.
While verbal or written agreements for limited liability partnerships are possible, the latter is considerably more prevalent and easier to enforce. An LLP agreement does not require filing with Companies House (unlike the articles of association of a private limited company) or any other government entity, unless required by industry regulations. This remains the case even if the agreement is contained in a written document.
Consequently, it can be maintained in a private manner, denoting that the information remains proprietary among the members and is inaccessible to customers, employees, or the wider public. In this article, How To Make LLP Agreement, we take a look at the process involved and the options available to you.
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What is the process of setting up an LLP agreement?
An individual is unable to form an LLP. In order to form and register an LLP, a minimum of two members is required. Ordinary members and designated members are the two categories of membership. It is noteworthy to mention that designated members bear legal responsibility.
Although more than two ‘designated’ members are required, an LLP may have even more. Each ‘ordinary’ member would be considered ‘designated’ in the absence of ‘designated’ members. This can present complications, as ‘designated’ members typically have greater responsibilities, including legal obligations, than ‘ordinary’ members.
Typically, the members of a limited liability partnership (LLP) maintain an equal share in both the earnings and liabilities of the enterprise. Each member’s specific rights and obligations are outlined in the partnership deed, which is also referred to as the partnership agreement or LLP agreement.
Designated members are entrusted with the duty of registering and maintaining accurate records with Companies House regarding accounting, annual returns, membership changes (including personnel or registered offices), and proceedings in the event of dissolution or liquidation of the LLP.
Registering at Companies house
Self-registration of an LLP is possible by downloading and completing the LL IN01 application form and subsequently submitting it to Companies House. Companies House can provide assistance with the registration if you encounter any difficulties. Alternatively, you may retain the services of a solicitor to complete the procedure on your behalf. It is important to understand that you will be required to consistently notify Companies House of any modifications that occur within your partnership.
Having the exact name you desire for your limited liability partnership (LLP) is not always possible. You should give your LLP a distinctive name. It is not possible for it to be identical to a registered LLP. Additionally, it is forbidden to register a name that implies a connection between your enterprise and the government or royalty. It is prohibited for your registered name to contain any objectionable terms. ‘Limited Liability Partnership’ or ‘LLP’ must appear at the conclusion of your name.
Verify that no similar name has already been registered by utilising the Webcheck service on the Companies House website to access the registrar’s index of names.
You may conduct business under a name other than the one registered with the LLP. The term for this is “business name.” Registration of a trademark is required if you desire to prevent other companies from operating under your name.
Despite the advantages associated with establishing a Limited Liability Partnership (LLP), it is crucial to exercise caution and consult with legal professionals prior to making any final decisions regarding its suitability for your company or its owners.
What documentation is required?
Prior to filing an application with Companies House to incorporate your LLP, it is critical to have all the necessary documentation at your disposal. You may do this independently, with the assistance of a corporate solicitor, formation agent, or firm. Employing a lawyer has the advantage of enabling them to provide advice and draft any necessary legal documentation, such as your partnership agreement.
What should an LLP agreement include?
An LLP agreement typically addresses the following important matters, among others:
- The responsibilities and privileges of every member;
- Mechanisms for regulating the investments of individual members in the LLP;
- Policies governing the use and ownership of company assets;
- The method of profit or loss distribution;
- The governance framework for the LLP;
- The manner in which important decisions will be reached.
The partners will be bound by an LLP agreement as soon as the LLP is officially registered with Companies House. The LLP agreement, being exempt from Companies House registration requirements, maintains its private and confidential nature, even among its members.
When should an LLP be set up?
LLP agreements are typically most effective when they are executed subsequent to the partnership’s registration at Companies House. Members are most likely to be able to reach an agreement regarding what they anticipate receiving and giving in return from the company at that time. Although one may genuinely want to revisit the task in the future, an ideal opportunity might not materialise, and by that time, the members’ attitudes and expectations towards the enterprise are more likely to have shifted. That would significantly complicate the process of reaching a consensus on the content of an LLP agreement.
How we can help
We have a proven track record of helping clients deal with the process involved in drafting LLP agreements. We will guide you diligently and ensure all checks are carried out swiftly and efficiently and we firmly believe that with the right solicitors by your side, the entire process will seem more manageable and far less daunting. You can read more about the range of corporate services we offer by clicking here: https://blackstonesolicitorsltd.co.uk/corporate-legal-services/
How to Contact Our Corporate Solicitors
It is important for you to be well informed about the issues and possible implications of an LLP agreement. However, expert legal support is crucial in terms of ensuring a positive outcome to your case.
To speak to our Corporate solicitors today, simply call us on 0345 901 0445, or click here to make a free enquiry. We are well known across the country and can assist wherever you are based. We also have offices based in Cheshire and London.
Disclaimer: This article provides general information only and does not constitute legal advice on any individual circumstances.
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